Slump-hit builders offer 20:80 scheme to lure homebuyers

In order to revive the slowing real estate market, developers are coming up with innovative schemes, like the 20:80 one, to attract buyers.

The developers are now offering a scheme where the buyer has to pay 20% of the cost while booking a flat and the remaining 80% on taking possession.

Hubtown Developers is offering payment options through the 20:80 scheme in its two residential projects, Hubtown Sunmist in Andheri (East) and Hubtown Hillcrest in Goregaon. Under this scheme, buyers can pay 20% of the amount upfront, while the remaining 80% can be paid at the time of possession. Besides Hubtown, Wadhwa Developers, Indiabulls, Nirmal Lifestyle and Runwal Group are using this scheme.

Vyomesh Shah, managing director of Hubtown, said that it is a win-win proposition for all. “While the buyers get a breathing period and don’t have to bear the EMI burden, the developers also get structured funds for the project execution at the desired pace.

The bank is also happy about getting business,” he said.
Naveen Makhija, a director of Wadhwa Developers, said that three players are important in the 20:80 scheme—buyers, sellers (developer) and the bank. “Here, all three players can replenish their duties. Developers can sell the flats; the buyer buys it without much risk while the bank makes money by disbursing the maximum amount. It is a win-win situation for all of them. Instead of taking construction loans at high rates, developers prefer to take home loans at lower interest rates,” he said.

Pankaj Kapoor, managing director of Liases Foras, a real estate research firm said that the real estate market is continuously going down. Hence, several developers are trying innovative techniques to draw buyers like the 20:80 scheme, offering a car to the first buyer and waiving the club house or parking fee.

Experts say developers have to resort to such schemes due to the slowing economy. “It (economy) has only registered a 5.3% GDP growth, which is the lowest in nine years. It will have a cascading effect on other industries, including the real estate industry. People will be reluctant to park their money in under-construction projects. Therefore, the developers are coming up with such schemes to get buyers and get money to carry the project forward,” an expert said.

Source: www.dnaindia.com